Bloomberg Reporter Brandon Kochkodin said Friday that this week’s rapid Reddit-user fueled surges in stocks like GameStop that are traditionally shorted by hedge funds will have “wide-ranging ramifications,” for Wall Street.
Kochkodin said that the ramifications could include that people are deterred from shorting stocks in the future.
In an interview on Hill.TV’s “Rising,” Kochkodin responded to announcements from some that they would stop engaging in short selling after amateur investors on Reddit’s subforum r/WallStreetBets (WSB) drove up the prices for stocks like GameStop and AMC.
For example, Andrew Left, founder of Citron Research, announced Friday morning that his firm will no longer be publishing short-seller reports.
“Short sellers at large are now being hunted,” Kochkodin explained. “What we’re seeing is people are moving and looking at other stocks now that are heavily shorted, and look, those stocks might be shorted for very good reasons, and that’s kind of a scary thing to just invest based on that premise alone.”
The reporter added, “there’s wide-ranging ramifications here, and it could be that one, people are afraid to short stocks from now on, it could be that hedge funds won’t short small market cap stocks where retail investors can have an outsized sort of presence.”
Watch part of Kochkodin’s interview above.
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